EN BANC[G.R. No. 143076. June 10, 2003]PHILIPPINE RURAL ELECTRIC COOPERATIVES ASSOCIATION, INC. (PHILRECA); AGUSAN DEL NORTE ELECTRIC COOPERATIVE, INC. (ANECO); ILOILO I ELECTRIC COOPERATIVE, INC.(ILECO I); and ISABELA I ELECTRIC COOPERATIVE, INC. (ISELCO I),
. THESECRETARY, DEPARTMENT OF INTERIOR AND LOCAL GOVERNMENT, and THE SECRETARY,DEPARTMENT OF FINANCE,
.D E C I S I O NPUNO,
.:This is a petition for Prohibition under Rule 65 of the Rules of Court with prayer for the issuance of a temporaryrestraining order seeking to annul as unconstitutional sections 193 and 234 of R.A. No. 7160 otherwise knownas the Local Government Code.On May 23, 2000, a class suit was filed by petitioners in their own behalf and in behalf of other electriccooperatives organized and existing under P.D. No. 269 who are members of petitioner Philippine RuralElectric Cooperatives Association, Inc. (PHILRECA). Petitioner PHILRECA is an association of 119 electriccooperatives throughout the country. Petitioners Agusan del Norte Electric Cooperative, Inc. (ANECO), Iloilo IElectric Cooperative, Inc. (ILECO I) and Isabela I Electric Cooperative, Inc. (ISELCO I) are non-stock, non- profit electric cooperatives organized and existing under P.D. No. 269, as amended, and registered with the National Electrification Administration (NEA).Under P.D. No. 269, as amended, or the National Electrification Administration Decree, it is the declared policyof the State to provide “the total electrification of the Philippines on an area coverage basis” the same “beingvital to the people and the sound development of the nation.” Pursuant to this policy, P.D. No. 269 aims to“promote, encourage and assist all public service entities engaged in supplying electric service, particularlyelectric cooperatives” by “giving every tenable support and assistance” to the electric cooperatives comingwithin the purview of the law. Accordingly, Section 39 of P.D. No. 269 provides for the following taxincentives to electric cooperatives:SECTION 39.
Assistance to Cooperatives; Exemption from Taxes, Imposts, Duties, Fees; Assistance fromthe National Power Corporation
. — Pursuant to the national policy declared in Section 2, the Congress herebyfinds and declares that the following assistance to cooperative is necessary and appropriate:(a) Provided that it operates in conformity with the purposes and provisions of this Decree,
cooperatives(1) shall be permanently exempt from paying income taxes
, and (2) for a period ending on December 31 of the thirtieth full calendar year after the date of a cooperative's organization or conversion hereunder, or until itshall become completely free of indebtedness incurred by borrowing, whichever event first occurs,
shall beexempt from the payment (a) of all National Government, local government and municipal taxes andfees, including franchise, filing, recordation, license or permit fees or taxes and any fees, charges, or costsinvolved in any court or administrative proceeding in which it may be a party
and (b) of all duties orimposts on foreign goods acquired for its operations
, the period of such exemption for a new cooperativeformed by consolidation, as provided for in Section 29, to begin from as of the date of the beginning of such period for the constituent consolidating cooperative which was most recently organized or converted under thisDecree: Provided, That the Board of Administrators shall, after consultation with the Bureau of InternalRevenue, promulgate rules and regulations for the proper implementation of the tax exemptions provided for inthis Decree.